Business Strategies

We continually assess the long-term performance of each of our businesses. We monitor the ability of each business to earn more than its cost of capital over a business cycle, compete effectively, and grow. We use these criteria to adjust our business portfolio, making prompt and disciplined decisions.

Our Financial Philosophy

Guiding Principles

• To protect the underlying interests of our shareholders and lenders
• To maintain an investment-grade credit rating
• To ensure access to capital markets at all times

Conservative Financial Strategy

• We manage our capital structure to target a 30 to 40 percent debt-to-total-capital ratio.
• We continually seek to improve returns from our businesses to strengthen our cash-flow ratios.

Capital Management

• We have high-quality assets that are efficient and relatively modern.
• We remove underperforming and nonstrategic assets from our system.
• We continually seek to improve productivity and optimize our operating systems.
• We will target to return 20 to 30 percent of our operating cash flow to shareholders in dividends.
• We periodically repurchase shares when market conditions warrant.

For more information about our operating strategies and performance, see our 2006 Investor Guide and information from our earnings announcements and meetings with financial analysts.